Property valuation reform seen unlocking housing potential, firming up LGU finances
By Luisa Maria Jacinta C. Jocson, Reporter
THE reform of the property valuation system and the digitalization of records is expected to drive growth in the housing industry, while simultaneously boosting the revenue of local governments through higher property tax assessments, economists said.
“This is consistent with addressing the housing backlog of about 6.5 million units of the country. Housing has a high multiplier effect on the economy as it supports many workers in the construction sector, and many businesses, industries for various construction materials, furniture, appliances, and the like,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.
“This is one powerful way to stimulate the economy from a fiscal policy standpoint,” he added.
The Department of Finance (DoF) is working to pass a Real Property Valuation and Assessment Reform bill, which forms the third package of the previous government’s Comprehensive Tax Reform Program.
The reforms aim to boost investor confidence in the real property sector through the adoption of internationally accepted valuation standards and professional real property valuation, according to the DoF.
“A key feature of the proposed reform is the establishment of a comprehensive and up-to-date electronic database to support local governments’ valuation functions. An electronically accessible database will allow for the study of trends and other analyses to support land use planning and development,” Finance Secretary Benjamin E. Diokno said at the Chamber of Real Estate and Builders’ Associations, Inc. forum last week.
Mr. Ricafort said that one of the key reform measures is the updating of property valuation methods as the basis for assessing property taxes.
“This would be able to structurally increase the property tax collections of the LGUs on a recurring basis, in view of the increase in property values over many decades,” he said.
The DoF is also working on streamlining the process of property tax collection in local government units (LGUs).
The government is monitoring the updating of real property tax base and rates in LGUs, Mr. Diokno added.
Mr. Ricafort said that further digitalization of government transactions with the public will help increase LGU tax collections.
“Faster and streamlined processing of housing and building permits will also help stimulate growth in the sector,” he added.
John Paolo R. Rivera, an economist at the Asian Institute of Management, also called for the review of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
“Does it stimulate growth in the property sector or is it just a source of tax revenue that is passed on to buyers? There is a need to make property investing in the Philippines more reasonable,” he said in a Viber message.
Mr. Rivera also called for the review of the Maceda Law (Republic Act 6552), which outlines protections for buyers of real estate via installment payments.